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FOUR MEDIA EVENTS THAT ROCKED THE FINANCIAL MARKETS

The media has incredible influence over many facets of life and the financial markets are no exception.

A famous study by Huberman and Regev showed how an article in the New York Times directly caused a 600% increase in one biotech company’s stock price, despite not actually revealing any new information.

The impact of news stories is often felt worldwide and, with this in mind, a new interactive tool has been launched to help traders get an instant picture of international repercussions.

Market Health by DailyFX, the leading portal for forex trading news, provides a snapshot of global markets and indices all in one place, allowing people to quickly assess the consequences of big events.

To launch the tool, Daily FX has analysed how four major news stories from the last decade have impacted the financial markets, to help investors better understand this complicated relationship.

 

Brexit rumours

Brexit sent shockwaves through the markets, with virtually every British industry from manufacturing to farming experiencing volatility. This uncertainty has seen the value of the pound fluctuate dramatically, particularly when the media speculate about the future.

In August 2019, rumours of a no-deal Brexit began to circulate in the press and sterling subsequently fell to a three-year low against the dollar.

However, in December, when news broke that the Conservatives were about to secure a large majority in government, the pound rose to a year-high. Many newspapers claimed a new period of calm, with hopes that Boris Johnson’s landslide victory would finally bring some stability to the country.

Unfortunately, the Coronavirus has meant 2020 has been anything but stable. The pandemic has completely dominated the news agenda, removing Brexit from the public eye. It’s hard to say whether its absence from the news is affecting trading, as Covid-19 is now the main influence on global markets. However, previous Brexit announcements have led to big price movements, so as soon as they inevitably make headlines again, the markets will surely respond.

Peter Hanks, Analyst at DailyFX, commented: “While Brexit headlines may not dominate the front page as they used to, it is important to consider the effect of persistent uncertainty derived from the theme.

“As the EU and UK clash, regulatory guidelines remain in flux and businesses may look to delay capital expenditures as a result. Consequently, the current Brexit proceedings may not spark dramatic price swings that dominate the tabloids as they used to, but the lingering uncertainty can certainly erode price over time. Thus, it can be argued Brexit is still a very real headwind for the British Pound and FTSE 100, perhaps just not to the degree that it has been in the past.”

 

US and Iran oil crisis of 2019

In the autumn of 2019, Iranian officials reported that one of their oil tankers had been hit by two rockets while in Saudi Arabian waters. The explosions damaged the vessel, causing oil to leak into the Red Sea and tensions between Iran and the USA – a strategic ally of Saudi Arabia – to escalate further.

An Iranian news agency first broke the story and then NBC broadcast it to the Western world, with allegations wildly thrown around. The National Iranian Oil Company said that the cause was under investigation, however rumours were already spreading.

With the media fanning the flames, Brent crude futures – the international benchmark for oil prices – rose by 2.4% to reach over $60.50 a barrel. Part of this increase will have been due to the impact of the attacks on oil reserves, but the media storm surrounding the event suggested that the Iran-US conflict was set to intensify. This prompted traders to jump on commodities in case the hostilities continued to send prices skywards.

 

Coronavirus vaccine

In 2020, the coronavirus ignited global panic as millions of people were infected, businesses closed and share prices tumbled. It was, and remains, the international health emergency of a generation and its unprecedented and universal nature means that it has wholly dominated the news agenda.

As the pandemic worsened, a worldwide search for a vaccine began and rumours of breakthroughs in the media led to movements in the stock markets. Share indexes, such as the FTSE 100, rose and fell with the emergence and then eventual discrediting of new drugs.

In April, stories began to circulate that claimed the American company Gilead had found a drug that was effective. This optimism led to surges in Asian, European and US stocks.

However, as doubts started to appear about the treatment’s reliability, the markets fell once more. The FTSE 100 dropped by 0.7% and the Stoxx 600 traded 0.3% lower.

While Gilead’s proposed remedy was ultimately unsuccessful, it does show the power of the media, as such updates directly boosted investor confidence. News of a successful medical breakthrough could well be the catalyst that sees the world’s markets start to recover.

 

Powerful posting 

In today’s world, most breaking news stories are first revealed on social media, with information able to be shared as soon as events occur. Traders now need to monitor content on both traditional news sites and channels like Facebook and Twitter, as sometimes a single post can create waves in the financial markets.

In 2015, the billionaire activist, Carl Icahn, tweeted that he believed Apple’s stock was undervalued. This simple post caused the tech giant’s market value to rise by more than $8 billion in just one day. Conveniently for Icahn, a major Apple shareholder, his own investment in the company increased in value by $76.5 million.

With social media clearly holding great power, it’s crucial that traders are also wary of fake news stories. When somebody hacked The Associated Press’ Twitter account and posted that President Barack Obama had been injured in an explosion at the White House, the DOW Jones dropped by over 140 points. The temporary loss of market cap in the S&P 500 alone totalled a staggering $136.5 billion. The story wasn’t true, but it shows how significantly markets can fluctuate as a result of social media.

John Kicklighter, Chief Currency Strategist at DailyFX, said: “Before a day begins, traders need to check how markets around the world have performed and how they have reacted to any latest news. A single story can send ripples across the planet, so it’s important to assess it’s full impact before making any moves on the domestic stock exchange.

“The DailyFX Market Health tool has the advantage of a clear and interactive structure, giving traders exactly the benefits they need to start a day.”

 

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VIBEPAY SETS SIGHTS ON GROWTH WITH INTEGRATION OF MORE UK BANKS AND NEW BUSINESS ACCOUNTS

VibePay is continuing on its ambitious path of growth, with the integration of more UK banks and payment providers via open banking, and a business account function in its newly launched social payments app.

With 24 banks now integrated with the app, including new additions Starling, Capital One and Tesco, VibePay is aiming to boost engagement with its 50,000 users and drive more sign-ups amongst its Gen Z audience.

The addition of business accounts for the first time will open up VibePay to a small business audience and appeal to the many Gen Z-ers who earn money from selling on their social channels or platforms like Depop. This functionality will enable them to make and receive payments with no fees and provide instant access to funds and a transaction dashboard to track their payments.

 

The new app will see further functionality added over the next few weeks including:

  • Vibe.me links, giving all users a personalised payment URL
  • Vibe ID – an ‘online passport’ allowing users to link their bank account and seamlessly transact and interact with brands across the web
  • QR codes, to scan for instant payments
  • Vibe Shop – a new way to buy Vibe merchandise via pay with bank functionality
  • Integration with VibeTickets, allowing its 100,000 users to make payments via VibePay with no fees

 

Luke Massie, founder of VibePay, says“This new app is the culmination of months of work – we’ve taken invaluable feedback from the VibePay community and looked at how we can make the app bigger and better so it’s easier, more fun and an indispensable tool for our users’ lives.

 We’re built for Gen Z by Gen Z which means we’re able to reach this critical audience with a unique solution built on their lives. We can’t wait to roll out the new functionality over the coming weeks and see our community continue to grow. We’ve already got our sights set on the next phase of growth for 2020 and beyond.”

 

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BOARD REPORT HIGHLIGHTS COMPLEX DECISION-MAKING PROCESS ACROSS BANKING AND FINANCE SECTOR

‘The State Of Decision-Making’ report from Board, reveals business decisions made in silos without modern planning tools

A third (33%) of Banking & Finance decision-makers believe decisions made in silos, despite majority (63%) of decisions being implemented worldwide

More than half (57%) of Banking & Finance decision-makers rely on spreadsheets for decision-making despite modern planning tools now available

 

Board, the #1 decision-making platform, has today released ‘The State Of Decision-Making’ report focussing on how UK organisations make their important business decisions.

Based on a survey of 500 senior decision-makers, across industries including, Banking & Financial Services, Consumer Goods, Manufacturing, Pharmaceutical, Professional Services, Retail, and Transport & Logistics,  ‘The State Of Decision-Making’ report from Board shows that today’s business decision-making process is increasingly complex, with multiple departments and seniority levels all responsible for some form of decision-making, leading to a lack of cohesion between units and a waste of business resources.

 

The State Of Decision-Making’ research found that while a clear majority of respondents (63%) working within the banking and finance sector say the important decisions they are responsible for get implemented globally, the decision-making process itself is not joined-up across the business, with one third (33%) also saying that crucial business decisions are made in departmental silos.

 

The research, conducted on behalf of Board International by independent research organisation 3GEM, also asked respondents the tools they use to make decisions and, while almost every action within an organisation today will lead to the creation of new data, it seems many businesses are not using the crucial insights which data can provide to make important decisions.

 

More than half (55%) of respondents in the banking and finance industry said they were making business decisions based on data and insights, but ‘gut feeling’ decisions are still made by up to 44% of companies. What’s more over half (57%) of the sector’s companies still rely on spreadsheets to aid their decision-making, despite more modern and reliable tools now available.

 

“In today’s fast-paced, data rich and evolving business environment, making quick and effective decisions is critical to both compete and survive,” explains Gavin Fallon, Managing Director for UK, Nordics & South Africa at Board International. “Important decisions are being made at any one time across multiple business functions, but all too often, important decision-making is disconnected, modular or fragmented.”

 

The research also asked respondents about the challenges banking and finance decision-makers face at their organisation,  with nearly a third (29%) citing a lack of available data and insights and one quarter (25%) citing the fact there are too many people in the decision-making process as their biggest frustrations. However, industry decision-makers believe that the process can be improved with the introduction of new technology, with the majority (57%) of respondents saying this would make their decision-making better, while 41% also felt increased use of data and insights would help.

 

“Businesses have to plan every day for a far more uncertain future and set themselves up to prepare for change and keep changing against the backdrop of a more volatile and uncertain marketplace than ever,” continues Fallon. “A bad decision can have wide-ranging impact across the whole organisation and no business can afford to waste time and resources on bets that may or may not come off.  As the business environment increases in complexity, the ability to not just react, but predict, in real-time, becomes more important than ever.”

 

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